Contrary to Western doom and gloom interpretations, China’s two sessions now taking place in Beijing offer a fascinating mix of realpolitik and soft power. Every year, the two sessions involve the National People’s Congress (NPC) – the legislative body – and the Chinese People’s Political Consultative Conference (CPPCC) – the political advisory body – laying down the Chinese equivalent of the state of the union.

Premier Li Keqiang’s report acknowledged that Beijing foresees “graver and more complex” risks and “both predictable and unpredictable” challenges, with the conclusion that China must be “prepared to fight tough battles” in 2019. It was undiluted realpolitik.

An economic growth target in the range of 6.0% to 6.5% is still massive in terms of the expansion of global capitalism – irrespective of the usual suspects carping on about China “stalling” or mired “in deep crisis.”

A deficit-to-GDP ratio set at 2.8% – slightly higher than the 2.6% last year – is not exactly a problem for such a huge economy.

What’s quite intriguing is how “Made in China 2025” – the full designation – simply vanished from the 2019 Government Work Report.

Yet the policy remains – transmuted in the report on the expansion of “smart plus.” By extending tax cuts for manufacturers and small-business taxpayers, Beijing will keep driving no holds barred toward what Li defined as “building up a powerful manufacturing country” – from industrial development to tech innovation.

Prosperity, Sun Tzu-style

The Sun Tzu tweak is that Beijing will tone down promoting the Made in China 2025 drive in public. Yes, the Chinese are learning soft-power techniques – fast.

Beijing’s top targets remain, well, on target; to lift 30 million rural residents from poverty and to double per capita income by next year from a decade earlier, thus arriving at the cherished status of “moderately prosperous society.” By any measure, this is a groundbreaking achievement of historic proportions.

It’s virtually impossible for the West to understand the intricacies of how decisions are made in China. First you consult – broadly, vertically and horizontally. Then you reach a – strategic – consensus. The results are firmly set in annual meetings such as the two sessions and in detailed five-year plans.

The New Silk Roads, or Belt and Road Initiative (BRI), are broadly planned all the way to 2049. We are still in the planning stage – implementation, officially, has not even started.

In parallel, geopolitical and geo-economic twists and turns are addressed by constant tweaks and tactical adjustments. That’s the “prepared to fight tough battles” emphasis on Li’s report.

And here lies the challenge posed by the Deng Xiaoping–conceived Chinese system to the mud wrestling of Western democracy. Terminology is irrelevant; call it “socialist democracy” with Chinese characteristics, what matters is if it works. For China.

Terminology actually matters – but only in a Chinese context. Take for instance dixian siwei – which can be loosely translated as grassroots thinking. You hold on to what you have, and rest on a solid foundation, and you stay “sober and strategically focused” when facing new challenges, in the words of President Xi Jinping, who has been using the concept widely. The concept is actually an upgrade of Deng’s “crossing the river while feeling the stones.”

From a Western point of view, what may be open to wide debate is the basis of the concept: “To fully adhere to the party’s political line.” Well, for better or for worse, there’s no other line in the market in terms of 21st-century China. Call it “keep calm and carry on” with Chinese characteristics.

‘Smart plus’ meets BRI

The very few informed China analysts with a Western background, such as Andy Rothman, are adamant: China won’t “collapse” any time soon. Rothman makes a pretty straightforward case: China has already structurally changed, a swift process that crystalized last year.

In a nutshell, economic growth is now driven by consumption, the economy is becoming less and less dependent on exports, and there’s no more pre-eminence of state investment.

And that leads us to the external vectors – and the role of BRI.

This is to a large extent a China goes West strategy. That’s how Beijing has conceptually framed this massive connectivity drive – increased connectivity across the Global South shields emerging markets everywhere from shocks provoked by what can only be construed as Western instability.

Minxin Pei, who now holds the chair in US-China relations at the Kluge Center of the Library of Congress, is among those accusing the BRI of sliding “into obscurity.”

Yet it’s not a question of “taking money away from Chinese pensioners to build a road to nowhere in a distant land,” as Pei wrote in the Nikkei Asian Review. It’s about BRI as the international partner of Made in China 2025.

And it’s about Beijing offering a unique path, for instance to Central Asian and Southeast Asian neighbors – the BRI as a framework for long-term sustainable development, and mixing industrial, agricultural and hybrid economic models.

And that explains why Beijing is becoming responsive to reconfiguring BRI projects in Malaysia, Myanmar, Pakistan or Sri Lanka.

Once again, it’s dixian siwei on the move. It’s as if Team Xi have been listening, softly, to that famous closed-door speech in September last year by Deng Pufang, Deng Xiaoping’s son. He urged China to “know its place” and not be “overbearing.” That is now translating into “keep calm and carry a ‘smart plus’ strategy.”

Saker note: a rather harsh criticism of the Russian Government and the Kremlin in this SouthFront analysis. Sadly, I cannot say that I disagree with what they say. In fact, I think that they are spot on and that all the “loyal” Kremlin-bots who deny that there is a serious problem in Russia are wrong. Supporting Vladimir Putin’s struggle to truly make Russia sovereign again and built a new multi-polar world does not at all entail being blind to all the very real mistakes and even faults of the Russian government. I can only say that I hope that SF is right and that the current lack of support of the Russian people of the government’s neo-liberal/capitalist policies will force Putin to correct the course and return to the kind of social policies the Russian people clearly want. It is also high time for Russia to take a harsher stance on the Ukraine, if only because the situation in the Ukraine (political and economic) is a total disaster and because some kind of military escalation in the Ukraine seems inevitable. All in all, yet another absolutely superb report by SouthFront who sober analysis contrasts favorably with what both flag-wavers and fear-mongers typically produce.

The Russia of 2019 is in a complicated economic and even political situation. Smoldering conflicts near its borders amid continued pressure from the US and NATO affect the situation in the country negatively. This is manifested in society and in national politics. The approval rating of the Russian government and personally of President Vladimir Putin has been decreasing.

According to VCIOM, a state pollster, in January 2019, Putin’s confidence rating was only 32.8%. This is 24% less than in January 2018 when it was 57.2%. At the same time, the confidence rating of Prime Minister Dmitry Medvedev was 7.8%. The approval rating of his cabinet is 37.7% while the disapproval rating is 38.7%. Opposition sources show data, which is far worse for the current Russian leadership.

This tendency is not linked to the foreign policy course of the Kremlin. Rather, it’s the result of the recent series of liberal-minded economic reforms, which look similar to the approaches exercised by the Russian government in the mid-1990s. The decision to increase Value Added Tax amid the slowing Russian economy, especially in the industrial sector, and a very unpopular pension reform increasing the retirement age were both factors contributing to the further growth of discontent in the population.

Russia’s GDP increased by 2.3% in 2018 compared to 1.6% in 2017. However, the Ministry of Economic Development, in its document entitled “Economic Picture” stated that this is linked to “one-time factors” and is not “stable”. The ministry maintained its earlier forecast stating that GDP growth in 2019 will be 1.3%. It confirmed increasing capital outflow. In this case, the repayment of funds to Western creditors by the Russian private sector is one of the causes.

The Ministry of Economic Development also pointed out that the expendable income of the population decreased by 0.2%. Statutory charges, including the increased taxes, are named as one of the reasons. The document says that statutory charges grew by 14.8% in 2018.

Additionally, the population is facing an increasingly restrictive administrative pressure: new fines and other penalties for minor violations in various fields and additional administrative restrictions limiting the freedom of actions of citizens. Restrictive traffic management of big cities, increasing fees for using federal highways as well as policies that are de-facto aimed at small business and self-employed persons are among its landmarks.

Meanwhile the general population has no effective levers of pressure to affect or correct government policy. The public political sphere has become a desert. United Russia (Edinaya Rossiya) is the only political party still de—facto existing in public politics. By now its ideological and organizational capabilities have become exhausted. Other “political parties and organizations” are just media constructs designed to defend the interests of a narrow group of their sponsors. It is hard to find a lawmaker in the State Duma or the Federation Council, who is not affiliated with the cliquish top political elite and oligarch clans.

In the media sphere, the government has failed to explain its current course to the population. A vast majority of the initiatives of Medvedev’s cabinet face a negative reaction from the population. A spate of scandals involving high and middle level government officials made the situation even worse. These cases revealed blatant hypocrisy and the neglectful attitude to duties of some Russian officials.

Some of the officials even became heroes of nationwide memes. Probably, the most prominent of these heroes are Minister of Labour and Employment of the Saratov region Natalia Sokolova and Head of Department for Youth Policy in the Sverdlov Region Olga Glatskikh.

Sokolova advised Russian pensioners to eat “makaroshki” [a derogatory term for maccheroni] to save money and to thus become able to survive on the subsistence minimum of 3,500 RUB [about 50 USD] per month.

“You will become younger, prettier and slimmer! Makaroshki cost is always the same!”, she said during a meeting of the regional parliamentary group on social policy in October 2018 adding that discounted products can be used to create a “balanced, but dietic” menu.

Glatskikh became a meme hero thank to her meeting with young volunteers during the same month. Commenting on the possible financing of youth projects, she told volunteers that the government did not ask their parents “to give birth” to them. So, they should expect nothing from the state.

In the period from 2018 to 2019, there were multiple arrests of officials caught exceeding the limits of their authority and being involved in corruption schemes. In comparison to previous periods, this number had increased by 1.5-2 times. The most recent detention took place right in the Parliament building on January 30. A 32-year-old senator, Rauf Arashukov, is suspected of being a member of a criminal group involved in the 2010 murders of two people and in pressuring a witness to one of the killings. On the same day, authorities detained his father, an adviser to the chief executive of a Gazprom subsidiary, Raul Arashukov. He is suspected of embezzling natural gas worth 30 billion rubles ($450 million).

However, these actions do not appear to be enough to change the established media situation. After a large-scale corruption scandal in the Ministry of Defense in 2012, which led to almost no consequences for key responsible persons including former Defense Minister Anatoly Serdyukov, who even continued his carrier in state-linked corporation Rostec. The general public has serious reservations about any real success of anti-corruption efforts.

The aforementioned factors fuel the negative perception of the Medvedev government and Vladimir Putin as the head of state among Russian citizens.

The 2014 events in Crimea showed to the Russian population that its state is ready to defend the interests of the nation and those who describe themselves as Russians even by force of arms. This was the first case when this approach was openly employed in the recent history of Russia. Therefore, the population was enthusiastic and national pride was on the rise. However, the Kremlin failed to exploit these gained opportunities and did not use them to strengthen the Russian state. In fact, up to February 2019, the policy towards eastern Ukraine has been inconsistent. At the same time, Moscow continues to lose its influence in post-Soviet states. This can be observed in both the Caucasus and Central Asia. Even, their close ally, Belarus, occasionally demonstrates unfriendly behavior and focuses its own efforts on the exploitation of economic preferences granted by Russia.

Evaluating the current internal political situation in Russia and its foreign policy course, it’s possible to say that the Russian leadership has lost its clear vision of national development and a firm and consistent policy, which are needed for any great power. Another explanation of this is that the Russian leadership is facing pressure from multiple agents of influence, which stand against vision of a powerful independent state seeking to act as one of the centers of power on the global stage. One more factor, often pointed out by experts, is the closed crony-caste system of elites. This system led to the creation of a leadership, which pursues its own narrow clannish interests. Apparently, all of these factors influence Russian foreign and domestic policies in one way or another.

The aforementioned large-scale anti-corruption campaign, regarding the people’s show-me attitude towards its result, could be a sign of a new emerging trend, which would lead to a purge of the corrupt elites and to strategic changes in Russian domestic policy.

It is highly likely that Russia will face hard times in the next two years (2019-2020) and face various threats and challenges to its economy, foreign policy course and even to its statehood.

In order to assess the prospects of Imran Khan’s Pakistan Movement for Justice (Pakistan Tehreek-e-Insaf) as a political institution, we need to study its composition. With the benefit of hindsight, it seems the worst decision Pakistan’s former Prime Minister Nawaz Sharif took in his political career after returning from exile in November 2007 was his refusal to accept Musharraf-allied Pakistan Muslim League-Quaid (PML-Q) defectors back into the folds of Pakistan Muslim League-Nawaz (PML-N).

After that show of moral uprightness in the essentially unprincipled realpolitik of Pakistan, the cronies of Pakistan’s former dictator General Pervez Musharraf joined Imran Khan’s Pakistan Movement for Justice in droves and gave birth to a third nation-wide political force in Pakistan besides Pakistan Muslim League-Nawaz (PML-N) and Pakistan People’s Party (PPP).

If we take a cursory look at the Pakistan Movement for Justice’s membership, it is a hodgepodge of electable politicians from various political parties, but most of all from the former stalwarts of the Musharraf-allied Pakistan Muslim League-Quaid (PML-Q).

Here is a list of a few names who were previously the acolytes of General Pervez Musharraf and are now the ‘untainted’ leaders of Imran Khan’s Pakistan Movement for Justice which has launched a nation-wide crusade against corruption in Pakistan: Jahangir Tareen, a billionaire businessman who was formerly a minister in General Musharraf’s cabinet; Sheikh Rasheed, although he has not formally joined Imran Khan’s political party, he has become closer to Imran Khan than any other leader except Imran Khan’s virtual sidekick, Jahangir Tareen, and has been appointed minister for railways in Imran Khan’s cabinet; and Shah Mehmood Qureshi, a former stalwart of Pakistan People’s Party who served as Pakistan’s foreign minister from 2008 to 2011 until he was disgracefully forced to resign after the Raymond Davis affair and the US Navy Seals operation in Abbottabad in 2011 in which Osama bin Laden was killed, though he has once again been appointed foreign minister in Imran Khan’s new cabinet last year.

I would implore the readers to allow me to scribble a tongue-in-cheek rant here on Imran Khan’s “Naya Pakistan (New Pakistan) Revolution”: This struggle for revolution isn’t the first of its kind in Pakistan and it won’t be the last. The first such “socialist revolution” took place back in 1953 against the unjust status quo of Pakistan’s slain Prime Minister Liaquat Ali Khan and Khawaja Nazimuddin’s Muslim League.

The revolutionary heroes of yore, Ghulam Muhammad, Iskander Mirza and General Ayub Khan, laid the foundations of the “dictatorship of the proletariat” in Pakistan. The first lasted from 1958 to 1971, and its outcome was the massacre of hundreds of thousands of Bangladeshis and the separation of East Pakistan.

The second such “socialist revolution” occurred against the “elected dictatorship” of Prime Minister Zulfikar Ali Bhutto in 1977 and the “revolutionary messiah,” General Zia-ul-Haq, ruled Pakistan from 1977 to 1988 with an iron hand. After sufficiently consolidating the gains of the “revolution” in Pakistan, he also exported the “revolution” throughout the Af-Pak region.

The immediate outcome of the “revolution” was the destabilization of the whole region. It spawned many tadpole “revolutionaries” whose names we now hear in the news every day, such as the Taliban, the Haqqanis, Jaish-e-Muhammad and Lashkar-e-Taiba.

The last such “Marxist-Leninist revolution” took place against the “monopoly capitalism” and “corrupt cronyism” of Benazir Bhutto’s People’s Party and Nawaz Sharif’s Muslim League in 1999.

On a serious note, however, the reason why Imran Khan is desperate now is that despite forming the provincial government and ruling the northwestern Khyber-Pakhtunkhwa province for five years from 2013 to 2018 and then forming the government in the center last year, he has no tangible achievements to show. Criticizing the government from opposition benches and making electoral promises is always easy, but showing visible improvement in the affairs of governance is a hard sell.

The electoral pledges of cracking down on corruption and doing away with bureaucratic red-tape might earn him a few brownie points in front of his immature audience, but to treat the malady of corruption, we must first accurately identify the root causes of corruption. Corruption and economy are inter-linked. The governments of prosperous, developed countries can afford to pay adequate salaries to their public servants; and if public servants are paid well, then they don’t have the incentive to be corrupt.

There are two types of corruption: need-based corruption and greed-based corruption. Need-based corruption is the kind of corruption in which a poor police constable, who has a large family to support, earns a meager salary; he then augments his salary by taking bribes to make ends meet. I am not justifying his crime, but only describing the factual position.

Whereas the instance of greed-based corruption, which is often legitimized, is the corporate exploitation of resources and workforce by behemoth multinational corporations whose wealth is measured in hundreds of billions of dollars, far more than the total size of the economies of developing countries.

After establishing the fact that corruption and economy are inter-linked, we need to ask Prime Minister Imran Khan what is his economic vision to improve Pakistan’s economy, and on what basis does he claim to improve the economy on a nation-wide scale when he failed to make any visible improvement in Khyber-Pakhtunkhwa province during the Pakistan Movement for Justice’s five-year rule in the province from 2013 to 2018?

Finally, Pakistan Muslim League-Nawaz (PML-N) and Pakistan People’s Party (PPP) are the experienced political parties in Pakistan. They learned their lesson from the politics of confrontation during the 1990s that Pakistan’s military establishment employs the Machiavellian divide-and-conquer tactic of hobnobbing with weaker political parties against stronger political forces in order to disrupt the democratic process and maintain the establishment’s stranglehold on its traditional domain, the security and defense policy of Pakistan.

The new entrant in Pakistan’s political landscape, Imran Khan’s Pakistan Movement for Justice, will also learn this lesson after paying the price of colluding with the establishment, but by then, it might be too late.

Nauman Sadiq is an Islamabad-based attorney, columnist and geopolitical analyst focused on the politics of Af-Pak and the Middle East regions, neocolonialism and petro-imperialism. He is a frequent contributor to Global Research.

Introduction: There is a great deal of controversy about the true shape of the Venezuelan economy and whether Hugo Chavez’ and Nicholas Maduro’s reform and policies were crucial for the people of Venezuela or whether they were completely misguided and precipitated the current crises. Anybody and everybody seems to have very strong held views about this. But I don’t simply because I lack the expertise to have any such opinions. So I decided to ask one of the most respected independent economists out there, Michael Hudson, for whom I have immense respect and whose analyses (including those he co-authored with Paul Craig Roberts) seem to be the most credible and honest ones you can find. In fact, Paul Craig Roberts considers Hudson the “best economist in the world“!I am deeply grateful to Michael for his replies which, I hope, will contribute to a honest and objective understanding of what really is taking place in Venezuela.The Saker

The Saker: Could you summarize the state of Venezuela’s economy when Chavez came to power?

Michael Hudson: Venezuela was an oil monoculture. Its export revenue was spent largely on importing food and other necessities that it could have produced at home. Its trade was largely with the United States. So despite its oil wealth, it ran up foreign debt.

From the outset, U.S. oil companies have feared that Venezuela might someday use its oil revenues to benefit its overall population instead of letting the U.S. oil industry and its local comprador aristocracy siphon off its wealth. So the oil industry – backed by U.S. diplomacy – held Venezuela hostage in two ways.

First of all, oil refineries were not built in Venezuela, but in Trinidad and in the southern U.S. Gulf Coast states. This enabled U.S. oil companies – or the U.S. Government – to leave Venezuela without a means of “going it alone” and pursuing an independent policy with its oil, as it needed to have this oil refined. It doesn’t help to have oil reserves if you are unable to get this oil refined so as to be usable.

Second, Venezuela’s central bankers were persuaded to pledge their oil reserves and all assets of the state oil sector (including Citgo) as collateral for its foreign debt. This meant that if Venezuela defaulted (or was forced into default by U.S. banks refusing to make timely payment on its foreign debt), bondholders and U.S. oil majors would be in a legal position to take possession of Venezuelan oil assets.

These pro-U.S. policies made Venezuela a typically polarized Latin American oligarchy. Despite being nominally rich in oil revenue, its wealth was concentrated in the hands of a pro-U.S. oligarchy that let its domestic development be steered by the World Bank and IMF. The indigenous population, especially its rural racial minority as well as the urban underclass, was excluded from sharing in the country’s oil wealth. The oligarchy’s arrogant refusal to share the wealth, or even to make Venezuela self-sufficient in essentials, made the election of Hugo Chavez a natural outcome.

The Saker: Could you outline the various reforms and changes introduced by Hugo Chavez? What did he do right, and what did he do wrong?

Michael Hudson: Chavez sought to restore a mixed economy to Venezuela, using its government revenue – mainly from oil, of course – to develop infrastructure and domestic spending on health care, education, employment to raise living standards and productivity for his electoral constituency.

What he was unable to do was to clean up the embezzlement and built-in rake-off of income from the oil sector. And he was unable to stem the capital flight of the oligarchy, taking its wealth and moving it abroad – while running away themselves.

This was not “wrong”. It merely takes a long time to change an economy’s disruption – while the U.S. is using sanctions and “dirty tricks” to stop that process.

The Saker: What are, in your opinion, the causes of the current economic crisis in Venezuela – is it primarily due to mistakes by Chavez and Maduro or is the main cause US sabotage, subversion and sanctions?

Michael Hudson: There is no way that’s Chavez and Maduro could have pursued a pro-Venezuelan policy aimed at achieving economic independence without inciting fury, subversion and sanctions from the United States. American foreign policy remains as focused on oil as it was when it invaded Iraq under Dick Cheney’s regime. U.S. policy is to treat Venezuela as an extension of the U.S. economy, running a trade surplus in oil to spend in the United States or transfer its savings to U.S. banks.

By imposing sanctions that prevent Venezuela from gaining access to its U.S. bank deposits and the assets of its state-owned Citco, the United States is making it impossible for Venezuela to pay its foreign debt. This is forcing it into default, which U.S. diplomats hope to use as an excuse to foreclose on Venezuela’s oil resources and seize its foreign assets much as Paul Singer hedge fund sought to do with Argentina’s foreign assets.

Just as U.S. policy under Kissinger was to make Chile’s “economy scream,” so the U.S. is following the same path against Venezuela. It is using that country as a “demonstration effect” to warn other countries not to act in their self-interest in any way that prevents their economic surplus from being siphoned off by U.S. investors.

The Saker: What in your opinion should Maduro do next (assuming he stays in power and the USA does not overthrow him) to rescue the Venezuelan economy?

Michael Hudson: I cannot think of anything that President Maduro can do that he is not doing. At best, he can seek foreign support – and demonstrate to the world the need for an alternative international financial and economic system.

He already has begun to do this by trying to withdraw Venezuela’s gold from the Bank of England and Federal Reserve. This is turning into “asymmetrical warfare,” threatening what to de-sanctify the dollar standard in international finance. The refusal of England and the United States to grant an elected government control of its foreign assets demonstrates to the entire world that U.S. diplomats and courts alone can and will control foreign countries as an extension of U.S. nationalism.

The price of the U.S. economic attack on Venezuela is thus to fracture the global monetary system. Maduro’s defensive move is showing other countries the need to protect themselves from becoming “another Venezuela” by finding a new safe haven and paying agent for their gold, foreign exchange reserves and foreign debt financing, away from the dollar, sterling and euro areas.

The only way that Maduro can fight successfully is on the institutional level, upping the ante to move “outside the box.” His plan – and of course it is a longer-term plan – is to help catalyze a new international economic order independent of the U.S. dollar standard. It will work in the short run only if the United States believes that it can emerge from this fight as an honest financial broker, honest banking system and supporter of democratically elected regimes. The Trump administration is destroying illusion more thoroughly than any anti-imperialist critic or economic rival could do!

Over the longer run, Maduro also must develop Venezuelan agriculture, along much the same lines that the United States protected and developed its agriculture under the New Deal legislation of the 1930s – rural extension services, rural credit, seed advice, state marketing organizations for crop purchase and supply of mechanization, and the same kind of price supports that the United States has long used to subsidize domestic farm investment to increase productivity.

The Saker: What about the plan to introduce a oil-based crypto currency? Will that be an effective alternative to the dying Venezuelan Bolivar?

Michael Hudson: Only a national government can issue a currency. A “crypto” currency tied to the price of oil would become a hedging vehicle, prone to manipulation and price swings by forward sellers and buyers. A national currency must be based on the ability to tax, and Venezuela’s main tax source is oil revenue, which is being blocked from the United States. So Venezuela’s position is like that of the German mark coming out of its hyperinflation of the early 1920s. The only solution involves balance-of-payments support. It looks like the only such support will come from outside the dollar sphere.

The solution to any hyperinflation must be negotiated diplomatically and be supported by other governments. My history of international trade and financial theory, Trade, Develpoment and Foreign Debt, describes the German reparations problem and how its hyperinflation was solved by the Rentenmark.

Venezuela’s economic-rent tax would fall on oil, and luxury real estate sites, as well as monopoly prices, and on high incomes (mainly financial and monopoly income). This requires a logic to frame such tax and monetary policy. I have tried to explain how to achieve monetary and hence political independence for the past half-century. China is applying such policy most effectively. It is able to do so because it is a large and self-sufficient economy in essentials, running a large enough export surplus to pay for its food imports. Venezuela is in no such position. That is why it is looking to China for support at this time.

The Saker: How much assistance do China, Russia and Iran provide and how much can they do to help? Do you think that these three countries together can help counter-act US sabotage, subversion and sanctions?

Michael Hudson: None of these countries have a current capacity to refine Venezuelan oil. This makes it difficult for them to take payment in Venezuelan oil. Only a long-term supply contract (paid for in advance) would be workable. And even in that case, what would China and Russia do if the United States simply grabbed their property in Venezuela, or refused to let Russia’s oil company take possession of Citco? In that case, the only response would be to seize U.S. investments in their own country as compensation.

At least China and Russia can provide an alternative bank clearing mechanism to SWIFT, so that Venezuela can by pass the U.S. financial system and keep its assets from being grabbed at will by U.S. authorities or bondholders. And of course, they can provide safe-keeping for however much of Venezuela’s gold it can get back from New York and London.

Looking ahead, therefore, China, Russia, Iran and other countries need to set up a new international court to adjudicate the coming diplomatic crisis and its financial and military consequences. Such a court – and its associated international bank as an alternative to the U.S.-controlled IMF and World Bank – needs a clear ideology to frame a set of principles of nationhood and international rights with power to implement and enforce its judgments.

This would confront U.S. financial strategists with a choice: if they continue to treat the IMF, World Bank, ITO and NATO as extensions of increasingly aggressive U.S. foreign policy, they will risk isolating the United States. Europe will have to choose whether to remain a U.S. economic and military satellite, or to throw in its lot with Eurasia.

However, Daniel Yergin reports in the Wall Street Journal (Feb. 7) that China is trying to hedge its bets by opening a back-door negotiation with Guaido’s group, apparently to get the same deal that it has negotiated with Maduro’s government. But any such deal seems unlikely to be honored in practice, given U.S. animosity toward China and Guaido’s total reliance on U.S. covert support.

The Saker: Venezuela kept a lot of its gold in the UK and money in the USA. How could Chavez and Maduro trust these countries or did they not have another choice? Are there viable alternatives to New York and London or are they still the “only game in town” for the world’s central banks?

Michael Hudson: There was never real trust in the Bank of England or Federal Reserve, but it seemed unthinkable that they would refuse to permit an official depositor from withdrawing its own gold. The usual motto is “Trust but verify.” But the unwillingness (or inability) of the Bank of England to verify means that the formerly unthinkable has now arrived: Have these central banks sold this gold forward in the post-London Gold Pool and its successor commodity markets in their attempt to keep down the price so as to maintain the appearance of a solvent U.S. dollar standard.

Paul Craig Roberts has described how this system works. There are forward markets for currencies, stocks and bonds. The Federal Reserve can offer to buy a stock in three months at, say, 10% over the current price. Speculators will by the stock, bidding up the price, so as to take advantage of “the market’s” promise to buy the stock. So by the time three months have passed, the price will have risen. That is largely how the U.S. “Plunge Protection Team” has supported the U.S. stock market.

The system works in reverse to hold down gold prices. The central banks holding gold can get together and offer to sell gold at a low price in three months. “The market” will realize that with low-priced gold being sold, there’s no point in buying more gold and bidding its price up. So the forward-settlement market shapes today’s market.

The question is, have gold buyers (such as the Russian and Chinese government) bought so much gold that the U.S. Fed and the Bank of England have actually had to “make good” on their forward sales, and steadily depleted their gold? In this case, they would have been “living for the moment,” keeping down gold prices for as long as they could, knowing that once the world returns to the pre-1971 gold-exchange standard for intergovernmental balance-of-payments deficits, the U.S. will run out of gold and be unable to maintain its overseas military spending (not to mention its trade deficit and foreign disinvestment in the U.S. stock and bond markets). My book on Super-Imperialism explains why running out of gold forced the Vietnam War to an end. The same logic would apply today to America’s vast network of military bases throughout the world.

Refusal of England and the U.S. to pay Venezuela means that other countries means that foreign official gold reserves can be held hostage to U.S. foreign policy, and even to judgments by U.S. courts to award this gold to foreign creditors or to whoever might bring a lawsuit under U.S. law against these countries.

This hostage-taking now makes it urgent for other countries to develop a viable alternative, especially as the world de-dedollarizes and a gold-exchange standard remains the only way of constraining the military-induced balance of payments deficit of the United States or any other country mounting a military attack. A military empire is very expensive – and gold is a “peaceful” constraint on military-induced payments deficits. (I spell out the details in my Super Imperialism: The Economic Strategy of American Empire (1972), updated in German as Finanzimperium(2017).

The U.S. has overplayed its hand in destroying the foundation of the dollar-centered global financial order. That order has enabled the United States to be “the exceptional nation” able to run balance-of-payments deficits and foreign debt that it has no intention (or ability) to pay, claiming that the dollars thrown off by its foreign military spending “supply” other countries with their central bank reserves (held in the form of loans to the U.S. Treasury – Treasury bonds and bills – to finance the U.S. budget deficit and its military spending, as well as the largely military U.S. balance-of-payments deficit.

Given the fact that the EU is acting as a branch of NATO and the U.S. banking system, that alternative would have to be associated with the Shanghai Cooperation Organization, and the gold would have to be kept in Russia and/or China.

The Saker: What can other Latin American countries such as Bolivia, Nicaragua, Cuba and, maybe, Uruguay and Mexico do to help Venezuela?

Michael Hudson: The best thing neighboring Latin American countries can do is to join in creating a vehicle to promote de-dollarization and, with it, an international institution to oversee the writedown of debts that are beyond the ability of countries to pay without imposing austerity and thereby destroying their economies.

An alternative also is needed to the World Bank that would make loans in domestic currency, above all to subsidize investment in domestic food production so as to protect the economy against foreign food-sanctions – the equivalent of a military siege to force surrender by imposing famine conditions. This World Bank for Economic Acceleration would put the development of self-reliance for its members first, instead of promoting export competition while loading borrowers down with foreign debt that would make them prone to the kind of financial blackmail that Venezuela is experiencing.

Being a Roman Catholic country, Venezuela might ask for papal support for a debt write-down and an international institution to oversee the ability to pay by debtor countries without imposing austerity, emigration, depopulation and forced privatization of the public domain.

Two international principles are needed. First, no country should be obliged to pay foreign debt in a currency (such as the dollar or its satellites) whose banking system acts to prevents payment.

Second, no country should be obliged to pay foreign debt at the price of losing its domestic autonomy as a state: the right to determine its own foreign policy, to tax and to create its own money, and to be free of having to privatize its public assets to pay foreign creditors. Any such debt is a “bad loan” reflecting the creditor’s own irresponsibility or, even worse, pernicious asset grab in a foreclosure that was the whole point of the loan.

The Saker: Thank you very much for taking the time to reply to my questions!

Over 50 percent of Russians are disappointed in the government of Dmitry Medvedev, which, they believe, is unable to curb growing prices and provide jobs for people, a new poll has revealed. Some 23 percent said they were absolutely sure that the government must resign, with another 30 percent telling Levada-Center that they were also leaning toward this opinion. This means that a total of 53 percent would like the country to have a new cabinet. Trust in the government has crumbled since September, when only 23 percent advocated its resignation. Meanwhile, the proportion of people who believed the government should stay in charge was 40 percent, with 14 percent expressing full confidence in the cabinet, and 26 percent saying that resignation wouldn’t be the best idea.

This was very predictable and, in fact, I did predict just that when I wrote “A comment I just saw on the YouTube chat of the inauguration was succinct and to the point: “Путин кинул народ – мы не за Медведева голосовали” or “Putin betrayed the people – we did not vote for Medvedev”. This is going to be a very widely shared feeling, I am afraid (…) Medvedev is unpopular and that most Russians hoped to see a new face. Yet Putin ignored this public sentiment. That is a very worrying sign, in my opinion“. In a subsequent article I wrote that “it is quite clear to me that a new type of Russian opposition is slowly forming. Well, it always existed, really – I am talking about people who supported Putin and the Russian foreign policy and who disliked Medvedev and the Russian internal policies. Now the voice of those who say that Putin is way too soft in his stance towards the Empire will only get stronger. As will the voices of those who speak of a truly toxic degree of nepotism and patronage in the Kremlin (again, Mutko being the perfect example). When such accusations came from rabid pro-western liberals, they had very little traction, but when they come from patriotic and even nationalist politicians (Nikolai Starikov for example) they start taking on a different dimension. For example, while the court jester Zhirinovskii and his LDPR party loyally supported Medvedev, the Communist and the Just Russia parties did not. Unless the political tension around figures like Kudrin and Medvedev is somehow resolved (maybe a timely scandal?), we might witness the growth of a real opposition movement in Russia, and not one run by the Empire. It will be interesting to see if Putin’s personal ratings will begin to go down and what he will have to do in order to react to the emergence of such a real opposition“.

Think about it in this way: we know from ALL the past elections that the pro-Western segment of the Russian population is somewhere around 1-3% (that is why they cannot make it into the Duma). But let’s generously give that hardcore, liberal, opposition 5%, for argument’s sake. So if 53% of Russians want a new cabinet, and if 5% of Russians are hardcore pro-Western liberals, then who are the remaining 48%?

Or in this way: if 53% of Russians want a new cabinet, and if Putin’s approval rating is still somewhere in the 65% range, who are those Russians who like Putin but dislike the Medvedev government?

There is an easy cop-out argument which I´ve often offered to explain away this fact:

Levada Center is officially classified as a “foreign agent” under Russian law. This makes sense: for one thing, Levada Center receives most of its financing from abroad, including the USA and even the Pentagon! Furthermore, Levada is staffed by liberals (in the Russian meaning of the word which really means “pro-US”) whose biases are also reflected in their work. However, while this is all true, Levada is still credible enough to be cited even by Russian officials. Finally, the kind of results Levada publishes are often generally similar to the finding of the official VTsIOMpolling institution, not down to the percentage point, but often reflecting similar trends (check out the VTsIOM English language page here: https://wciom.com/). So the fact that Putin is much more popular than Medvedev or that the majority of Russian people are unhappy with the government really is not in doubt.

So regardless of the actual numbers, it is clear that the Russian government is only popular with those whom it allows to make a lot of money (corporations and various millionaires and billionaires) and that everybody else strongly dislikes it.

And yet, recently Putin was asked if he was happy with the government and his reply was “on the whole, yes“.

This type of political yoga is hard to sustain in the long term: if Putin is the champion of the interests of the common people, and if most common people feel that the government cares more for millionaires and billionaires, then how can the President say that he is “on the whole happy” with the government?

It is truly a crying shame that the basics of Marxism-Leninism is not taught in schools and colleges any more (even some self-described “Communists” are clearly clueless about what Marx, Lenin or even Hegel taught!). Not because the solutions advocated by Marx and his followers are so universally effective, but because one can use the Marxist-Leninist conceptual toolkit to better understand the world we live in and, one can do this without necessarily endorsing the solutions offered by Marxism. For example, in the West at least, very few people are aware of this very simple Marxist-Leninist definition of what a state, any state, really is. According to Lenin, the state is simply an “apparatus of coercion and violence by which the ruling class governs the society“. Specifically Lenin wrote:

In essence, the state is ruling apparatus created from the human society. When such a group of people appears, one which is only concerned with ruling over others, and which for that purpose needs a coercion apparatus which can force people to obey by means of jails, special units, armed forces, etc, – that is the moment when the state appears (Lenin, collective works, vol 39, page 69).

From a Marxist point of view, any state is always and by definition the dictatorship of the ruling class, which is a good thing, at least according to the Marxists, when this ruling class is the workers and people, and a very bad thing when the ruling class is the plutocracy.

In the post-modern West, where political discourse has been reduced to a particularly nauseating form of intellectual flatulence, the very notion of “class” and “class warfare” has been fully replaced with vapid (pseudo-) identity politics which completely obfuscate all the real issues and problems our world is dealing with. Thus, by removing the concepts and categories needed to understand the nature of the struggle which is taking place internationally, but also inside each of the countries currently living under the AngloZionist yoke, the leaders of the Empire have deprived the people they rule over from the means to understand why and how they are oppressed. All that nonsense about “gay” rights, gun control, #meetoo, the many sex scandals, the struggle for racial identity (White or Black or any other), abortion, drugs and all the rest of the crap we are fed on a daily basis by the AngloZionist propaganda machine are primarily a distraction to keep the eyes of the general population from the real issues. In a way, this zombification and re-direction to fake topics serves exactly the same function as the red cape of the bullfighter: to keep the bull busy with trying to gore a harmless red piece of cloth while completely missing the real cause of his suffering and eventual death.

From that point of view, the Russian people are much better informed and have a much better understanding of what is going on. For example, while in the West the people define “democracy” as “people power” (or something similar), in Russia the joke is that “democracy is the power of the democrats” which, in Russia, is a general codeword/euphemism for “pro-US wealthy liberal” who want to turn Russia into some kind of “bigger Poland” or something equally uninspiring.

Various pro-Western “intellectuals” like to say that this is an old Russian pathology: to say that the Czar (President) is very good, but his court (the Ministers) are bad and that this makes absolutely no sense. These are the folks who go as far as denying the existence of a struggle between what I call Eurasian Sovereignists (roughly Putin supporters) and Atlantic Integrationists (roughly Medvedev and the “economic block” of this government).

The folks who deny this remind me of something Berthold Brecht once wrote after the 1953 uprising in Berlin in a short poem entitled “The Solution”: (emphasis added)

After the uprising of the 17th of June
The Secretary of the Writers’ Union
Had leaflets distributed in the Stalinallee
Stating that the peopleHad forfeited the confidence of the government
And could win it back only
By redoubled efforts. Would it not be easierIn that case for the governmentTo dissolve the peopleAnd elect another?

This deep alienation from the Russian masses, this notion that the Russian people have, yet again, failed to heed the “wise words” of the “progressive intelligentsia” and other (mainly financial) “elites” has plagued the Russian ruling classes since Peter I and is still at the very core of their worldview. Believe you me, the Russian “liberals” and the folks in the West who deny that there is any 5th column in Russia are psychologically and politically joined at the hip: neither one of them can accept this. Furthermore, both the Russian “liberals” and the western believers in the values of “democracy” and “free market capitalism” share exactly the same worldview: they want the Russian people to become “Europeans” not in a geographical sense, of course (geographically speaking most Russian live in the European part of Russia), but culturally! This is what the Popes wanted, this is what the French Freemasons wanted, this is what the Nazis wanted, and this is what the AngloZionists want. That dream to turn Russians into Europeans while totally cleansing them from any “Russian-ness” is what united *all* the invaders of Russia over the centuries.

But the “stubborn” Russian people just don’t seem to “get it” and, for some totally mysterious reason, they always resist all these “benevolent” western attempts at “civilizing” them.

This is exactly what we see today: Putin and his Eurasian Sovereignists try as hard as they can to *sovereignize* Russia; in other words, they want to make Russia *truly* Russian again. Sounds basic, but that is categorically unacceptable to the Russian plutocrats and to their supporters in the West. Thus any kind of defense of the Russian-ness of Russia is immediately and contemptuously dismissed as “national leftism”, “nationalism” or, God forbid!, “monarchism”. And when the person trying to make the argument that Russia ought to be Russian uses Marxist concepts or categories, these arguments are also dismissed out of hand as an “outdated rhetoric of a system which has failed and discredited itself”. What they fail to realize is to say that the collapse of the Soviet Union was due primarily/solely to the Marxist or Communist ideology is just as stupid as blaming the current collapse of democracy in the USA on the writings of the Founding Fathers rather than on the SOB politicians who are destroying this country day after day after day. Tell me: when the USA finally bites the dust, will you simply declare that “democracy is dead” and that the “collapse of the USA proved that democracy is not a viable regime”? So yes, the Soviet Union did indeed collapse, broken into 15 pieces by its own ruling elite (the Nomenklatura), but the ideas contained in the Marxist-Leninist ideology have not only not been “defeated” – they have not even been challenged (more on this issue here).

But, thank God! most Russians are still not willing to be incorporated into the “European cultural Borg collective“, at least not in the cultural sense. And in spite of 300 years of oppression by various pro-western regimes (with various degrees of russophobia, not all were equally bad), the Russian people still want to remain Russian, not just by speaking a language, but by having a ruler and a regime in power which they feel defends their interests and not the interests of the ruling class. They want to live in their own civilizational realm, and not the kind of post-Christian intellectual desert the West has become.

Many decades of rabid russophobia by the rulers of the AngloZionist Empire have convinced the Russian people that they have no friends in the European or North American ruling elites and that true freedom comes through liberation, not submission. That, and the appalling example of the consequences of the “Euromaidan” in the Ukraine.

It is very important to keep a close eye on this trend: the appearance of slowly but surely growing (truly) patriotic opposition (as opposed to the CIA-paid clowns in the Russian liberal camp). As for the “official” opposition (LDPR, KPRF and the Just Russia), they might decide to grow a few teeth, initially small, baby teeth only, but if this trend accelerates, they might decide to look a tad more credible. Until now the rather lame and ridiculous LDPR & KPRF parties are just a collective form of court jesters with no real opposition potential. Just look at how the KPRF, thoroughly discredited by their crazy choice of the millionaire Grudinin for candidate, jumped onto the pension reform PR-disaster to suddenly try to launch a referendum. This would never have happened in the past.

The political landscape in Russia is becoming more complicated, which is both good and bad. It is bad because Putin’s personal political credit suffers, however modestly for now, from his continuous inability to purge the Kremlin from the 5th columnists, but it is also good because if things get bad enough Putin will have no choice but to (finally!) get rid of at least the most notorious 5th columnists. But fundamentally the Russian people need to decide. Do they really want to live in a western-style capitalist society (with all the russophobic politics and the adoption of the terminally degenerate “culture” such a choice implies), or do they want a “social society” (to use Putin’s own words) – meaning a society in which social and economic justice and the good of the country are placed above corporate and personal profits.

You could say that this is a battle of greed vs ethics.

The future of Russia, and much of the world, will depend on the outcome of this battle.

UPDATE: well, just as I was mentioning that the fact that Levada Center and VTsIOM mostly agree, at least on trends, the Russian media is now reporting that the latter now also is reporting a drop in the popularity of Putin. And just to make things worse, the Russian authorities have deported an (in-)famous anti-Nazi Ukrainian journalist, Elena Boiko, to the Nazi-occupied Ukraine in spite of the fact that Boiko had requested political asylum in Russia. Now, Boiko is a very controversial person for sure (and, personally, not *at all* my cup of tea), but the sole fact that Russia would deport ANY anti-Nazi activist to the Nazi-occupied Ukraine is disgusting and revolting. And, sure enough, the bovine-excreta is already hitting the proverbial fan as now members of the Duma, journalists and various personalities are demanding explanations for this absolutely stupid and deeply immoral act. Sadly, can only agree with Nikolai Starikov who speaks of a “liberal revanche” following the “Russian Spring” of 2014. If this kind of nonsense continues we will see a further deterioration of Putin’s personal rating along with a gradual degradation of the Russian political environment.